In December 2014, State Farm filed for a 6.9% increase in homeowners and renters insurance rates, with an effective date of July 2015. The cost of this increase would have been about $77 million a year for State Farm policyholders. The Consumer Federation of California analyzed the application and found that not only was State Farm's request for rate increases unwarranted, but its current rates were also excessive. In January 2015, CFC and Consumer Watchdog filed petitions, urging the Department of Insurance to order the company to reduce its rates.

Following 13 days of hearings, with expert testimony from CFC's actuary, along with experts from CDI, Consumer Watchdog, and State Farm, an Administrative Law Judge concluded that State Farm's current rates were in excess of the reasonable rate of return standard established by California Proposition 103, and should be reduced by 7% retroactively to July 2015, along with interest owed to consumers who have been overcharged for the past 16 months. Insurance Commissioner Dave Jones approved the judge's recommendation and issued a Decision and Order today. The order also continues the reduction for the future. The retroactive reductions and the rejection of the 6.9% rate hike proposal should save policyholders about $312 million over a two year period.

The Consumer Federation of California intervened in the proceeding under Proposition 103, a 1988 initiative that ended price gouging by insurance companies. The voter-enacted law forces insurers to justify raise increases and allows customers and consumer groups to formally challenge proposed rate hikes.